New travel curbs imposed by President Donald Trump as the coronavirus spreads will send seismic shudders throughout the travel ecosystem — and by extension, the payments ecosystem as well.
That much is certain. But what’s less certain is just how widespread the damage might be.
There are too many impacts to list here, but they all point to negative shocks that are unlikely to end anytime soon. On Wednesday, Trump banned travel for 30 days from 26 European nations (excluding the U.K.). And Thursday, Princess Cruises halted operating all 18 of its cruise ships for two months after two vessels carried passengers infected with the virus.
Italy is on lockdown, China is effectively on lockdown and India canceled all non-official visas. Mass gatherings of all sorts — sporting events, business gatherings, concerts and beyond — are also being delayed or canceled. By Thursday, California, Rhode Island, Pennsylvania, Washington and Oregon had advised or had outright prohibited large gatherings.
Dozens of airlines have also limited or canceled flights. JetBlue CEO Robin Hayes told CBS on Wednesday that the hit to U.S. airlines “is probably worse” than the post-9/11 impact to air travel. The International Air Transport Association has estimated that across the globe, airlines could lose a fifth of their revenues, or as much as $113 billion.
And it’s from airlines that we can trace a domino effect of sorts that seems poised to hit the entire travel-and-tourism ecosystem.
After all, a drastic drop in demand for flights from both consumers and business travelers translates into dropping demand for hotels. And that translates into a double whammy for online travel agencies. Data compiled by Earnest Research and cited by Vox found that online travel agencies’ weekly travel sales fell more than 20 percent year over year for the week ended March 2.
That spells trouble for Booking.com, Expedia.com and others — and of course, for their stock prices. At this writing, Expedia shares were down some 15 percent on Thursday alone, while Booking.com’s parent Booking Holdings had shed more than 11 percent.
Travel agencies’ declines in bookings could become even more pronounced going forward, as various countries’ travel bans just began this week. Beyond online players, traditional brick-and-mortgage travel agencies will likely have to start laying people off.
There’s another wrinkle here, too — an “if” that now seems remote, but then again, what seemed remote just a few weeks ago (quarantines, bans on mass gatherings) now are front-and-center realities.
As reported Thursday, President Trump said it’s a “possibility” the administration could impose travel restrictions within the United States, if areas get to be “too hot,” as Trump termed it.
“We haven’t discussed that yet,” Trump said at a meeting with the Irish prime minister at the White House. “Is it a possibility? Yes. If somebody gets a little bit out of control, if an area gets too hot.”
To get a sense of how bad all of this could be for the broader U.S. economy — amid the restrictions on gatherings, the bans on incoming tourists, and the specter of limitations on travel within the U.S. itself — note that the U.S. Travel Association estimated there were 8.9 million American jobs directly supported by domestic and international travel during 2018.
The agency also calculates that travel, indirectly supports another 6.8 million U.S. jobs.
All told, the USTA estimates that travel represents America’s seventh-largest employer in the United States. In fact, the U.S. Bureau of Economic Analysis calculates that U.S. tourism-related output totals $1.9 trillion a year.
In a statement Thursday, USTA, through its President and CEO Roger Dow, said that “temporarily shutting off travel from Europe is going to exacerbate the already-heavy impact of coronavirus on the travel industry and the 15.7 million Americans whose jobs depend on travel.” As many as 83 percent of travel employers are small businesses, said the organization. In examining the direct impact to the industry from Europe, USTA said in March of 2019 alone, there were 850,000 international visitors who flew into the U.S. from Europe, excluding the U.K., which accounted for 29 percent of overseas arrivals here. Those visitors, the association said, spent $3.4 billion in the United States that month.
To paint a more linear picture: the traveler who does not book a trip, does not give money to OTAs and airlines and hotels; does not go to conventions or theme parks; does not get hungry at those places; and does not spend money at restaurants or buy trinkets for the kids.
One area that may be particularly decimated, long term, in the U.S. and beyond: The conference industry, especially as businesses throttle back on spending and as they tell workers to stay home. Oxford Economics has estimated that direct spending on business events across the globe represented $1 trillion of direct spending, and where such events underpin 10.3 million direct jobs globally.